The weekend tirade launched by Danny Williams against Stephen Harper - over something that doesn't exist yet - served as a reminder that the vast majority of people have absolutely no idea what Equalization is all about.
They couldn't explain offshore revenues to you if you put a gun to their heads.
In some instances they just tune out when the pols start hammering each other. As the radio call-in shows demonstrated on Monday, though, the Premier's ability to stimulate his Pitcher Plants - Danny's version of astroturf - remains undiminished.
Also undiminished is his willingness to mislead and misrepresent a complex subject, reducing into an emotional issue that some people continue to be deluded into accepting at face value.
On top of all that, the level of sheer ignorance on ths basic issues is staggering. On Night Line, one self-proclaimed "researcher" claimed that oil revenues from this province's offshore are not included in Equalization calculations at all.
Now that is just simply nonsense. Sadly it is typical of the nonsense - simple factual mistakes a grade schooler wouldn't make - this maven of the Open Line spouts. Sadly, misrepresentation is the stock in trade of a certain type of politician too.
Following are some links to previous Bond Papers on Equalization.
The first one - "Equalization for beginners" - explains the system in as simple a way as possible.
The second one - "Equalization: the experts report; the Premier reacts" - is a bit more detailed and summarizes some of the changes to Equalization proposed by a federally-appointed commission.
A couple of recommendations leap out in October as they did in June.
First of all, the panel recommended basing Equalization on actual revenues instead of projections. This would actually work well for Newfoundland and Labrador. All too often over the past decade and more we have found ourselves paying the feds back when their Equalization calculations underestimated how well the economy would do. This is one way to eliminate that problem of constantly having to pay out real cash in real clawbacks.
Second of all, the panel recommended inclusion of all resource revenues but only at the rate of 50% of revenues.
This has a couple of advantages for Newfoundland and Labrador. Right off the bat it hides 50% of all resource revenues from Equalization. Our offshore deals cover the other 50% of oil and gas cash.
Then, you have to realise it represents a compromise position. It's even a compromise between the position Danny Williams proposed last January to make the Equalization calculations - all revenue for all provinces - and the position Danny's own finance minister endorsed - all provinces, no non-renewable resources. Here's another post - "Equalization changes: Williams and Harper/Sullivan compared" - that looks more closely at the confusion within the provincial government on the Equalization file.
Overall though, the January 2005 offshore revenue deal should cover the 50% of oil revenue that isn't excluded from Equalization. Even if you realize that hydro-electric energy would be included in Equalization under those proposals as a renewable resource, Newfoundland and Labrador would enjoy a bonus it doesn't get today, namely hiding 50% of revenues from Equalization. Right now 100% is counted.
Still wondering what all this has to do with offshore revenues? Here's a link that will get you, ultimately, to a longer discussion paper on Danny Williams original offshore deal proposals.
